ISLAMABAD: Finance minister Ishaq Dar said on Thursday Pakistan would be able to make its debt payments due until December this year and would not default, with or without the revival of an International Monetary Fund (IMF) bailout program.
Dar’s remarks come as Moody’s Investor Service said this week Pakistan’s financing options beyond June were “highly uncertain” and it could default without an IMF bailout.
Pakistan is currently facing an acute balance of payment crisis, in which its foreign exchange reserves have shrunk to just four weeks of controlled imports.
“Let me assure you, we have taken care of every payment due till December this year and Pakistan will not default, IMF or no IMF,” Dar said during an address at the concluding session of a two-day, state-backed conference, the Islamabad Security Dialogue.
“We are a sovereign country and know how to manage our things as we did during the worst sanctions period in 1998 when we tested nuclear weapons and we will do it now.”
Referring to statements by international rating agencies, Dar said they represented “unfair global politics” with regard to Pakistan.
However, the finance minister did criticize the delay in signing a Staff Level Agreement (SLA) with the IMF, stating that it should have been finalized “long ago.”
Nearly 100 days have passed since the last IMF staff level mission to Pakistan and the two sides have yet to strike a preliminary deal — a key step to securing the next funding tranche of a bailout deal. That is the longest such gap since at least 2008.
The latest $1.1 billion tranche is part of a $6.5 billion bailout package the IMF approved in 2019, which is due to end in June, prior to the budget. So far, Pakistan has received $3.9 billion.
The cash-strapped country has already undertaken key measures to secure the IMF loan, including raising taxes and removing blanket subsidies and artificial curbs on the exchange rate.
“I have dealt for 30 years with this institution [IMF] as four-time finance minister and this SLA should have been signed ages ago but let them try and take their time,” Dar said.
“We have no issue as we have done everything they asked for under the sky, but do not spread rumors like these [of default] to make the market nervous. Pakistan is here to stay and will progress and develop”.
Dar said the technical work for the IMF program was concluded on February 9, but the delay in finalizing the SLA was due to an external accounts gap and the need for commitments from friendly countries to materialize.
“There were the commitments from friendly countries and now the IMF is waiting for those commitments to materialize but things are very much under control,” the finance minister said, “and hopefully we would move forward.”
As part of prior conditions, Pakistan has given an assurance that its balance of payments gap this fiscal year, which ends in June, is fully funded.
Pakistan has announced pledges worth $3 billion in financing support from Saudi Arabia and UAE, but the funds have yet to come through. Longtime ally China has rolled over and refinanced its loans.
Islamabad and the IMF have had differences over the gap. It is not clear if the Saudi, UAE and Chinese financing would be sufficient, or if more external support would be needed.
